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1. Market Discipline in the Direct Lending Space

   Davydiuk, Tetiana; Marchuk, Tatyana; Rosen, Samuel (October 2023, The Review of financial studies)

   Using the exclusion of business development companies (BDCs) from stock indexes, this paper studies the effectiveness of market discipline in the direct lending space. Amid share sell-offs by institutional investors, a drop in BDCs’ valuations limits their ability to raise new equity capital. Following this funding shock, BDCs do not adjust their capital structure. At the same time, they are reducing the risk exposure of their portfolios. We document a greater reduction in risk for BDCs subject to stronger market discipline from their debtholders. BDCs pass through the capital shock to their portfolio firms by reducing their investment intensity. 

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2. Direct lenders in the U.S. middle market

   Davydiuk, Tetiana; Marchuk, Tatyana; Rosen, Samuel (September 2024, Journal of Financial Economics)

   This paper studies the rise of direct lending using a comprehensive dataset of investments by business development companies (BDC). We exploit three exogenous shocks to credit supply, including new banking regulations and a major finance company collapse, to establish that BDC capital acts as a substitute for traditional financing. Using firm-level data, we further document that firms’ access to BDC funding stimulates their employment growth and patenting activity. Beyond credit provision, BDCs contribute to firm growth through managerial assistance. 

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3. Direct Lenders in the U.S. Middle Market

   Davydiuk, Tetiana; Marchuk, Tatyana; Rosen, Samuel (September 2024, Journal of financial economics)

   This paper studies the rise of direct lending using a comprehensive dataset of investments by business development companies (BDC). We exploit three exogenous shocks to credit supply, including new banking regulations and a major finance company collapse, to establish that BDC capital acts as a substitute for traditional financing. Using firm-level data, we further document that firms’ access to BDC funding stimulates their employment growth and patenting activity. Beyond credit provision, BDCs contribute to firm growth through managerial assistance. 

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4. Server Architecture From Enterprise to Post-Moore

   https://doi.org/10.1109/MM.2024.3418975  

   Falsafi, Babak; Ferdman, Michael; Grot, Boris (September 2024, IEEE Micro)

   Luiz Barroso started his career at Digital Equipment Corporation, investigating workload-optimized multiprocessor server architectures marketed to enterprises in the 1990s. These high-margin, low-volume products lost their market to more cost-effective enterprise servers built from high-volume desktop CPUs riding Moore’s law. The enterprise market has slowly transitioned to the cloud, where desktop PCs have formed the backbone of computing in data centers since the early 2000s to minimize cost and maximize the return on investment. Moving forward, with the absence of Moore’s law, future servers require a clean-slate, cross-stack design to scale in compute, communication, and storage capacity while reducing operational, capital, and environmental costs. 

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5. Capitalists in the Twenty-First Century*

   https://doi.org/10.1093/qje/qjz020  

   Smith, Matthew; Yagan, Danny; Zidar, Owen; Zwick, Eric (July 2019, The Quarterly Journal of Economics)

   Abstract How important is human capital at the top of the U.S. income distribution? A primary source of top income is private “pass-through” business profit, which can include entrepreneurial labor income for tax reasons. This article asks whether top pass-through profit mostly reflects human capital, defined as all inalienable factors embodied in business owners, rather than financial capital. Tax data linking 11 million firms to their owners show that top pass-through profit accrues to working-age owners of closely held mid-market firms in skill-intensive industries. Pass-through profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of pass-through profit as human capital income, we find that the typical top earner derives most of her income from human capital, not financial capital. Growth in pass-through profit is explained by both rising productivity and a rising share of value added accruing to owners. 

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